U.S. dollar versus alternative cryptocurrencies: Significance of inflation today

The US Dollar Index (DXY) currently stands at 98 points, with a neutral to slightly weaker trend indicated by the RSI at 44 to 49. A break above 100 points could further strengthen the dollar and weigh on risk appetite, while a break below 97.5 points could open up room for risk assets like stocks and cryptocurrencies.

The Federal Reserve has abandoned its strategy of "Average Inflation Targeting" (AIT) in favor of a more traditional monetary policy focus on a classic two-percent inflation target. This shift, signaled by Fed Chair Jerome Powell at the Jackson Hole Symposium, places price stability as the top priority for the Fed, dampening expectations of swift monetary easing.

Powell has also indicated openness to interest rate cuts in September, if labor market data weakens. However, the key for the markets is not just a September cut, but the pace of further rate hikes.

Meanwhile, the altcoin market is under pressure, with mid-cap altcoins feeling the brunt. The market capitalization of "Others" (all altcoins outside the top 10) is currently at 300 billion USD, and the dominance of "Others" is at 7.8 percent. After breaking a rising trendline, the RSI of the "Others" index remains neutral (around 53), showing no clear strength against Bitcoin and Ethereum.

The short-term direction of the altcoin market will be decided today, August 29, at 14:30 CET, with the release of the PCE inflation data. Expectations are for a 2.6 percent PCE inflation rate - the Fed's most important inflation measure. A higher value would make rate cuts more difficult.

In the political arena, US President Donald Trump is exerting growing influence over the Federal Reserve, with control of three of the seven governor posts on the Fed Board. If Trump's term extends to 2026 and he chooses to appoint governors aligned with his administration’s economic views, as he has shown interest in doing, it could lead to further shifts in monetary policy. However, it is currently not publicly known which individuals will serve as Federal Reserve Board governors when Trump leaves the U.S. presidency in 2026.

The labor market continues to be a key area of focus for the Fed, with the institution vowing to continue monitoring developments. The break above or below certain points in the DXY could have significant implications for both the US economy and global markets.

Sources for this information include Powell's statements on the monetary framework, labor market, and rate cuts, as well as data from TradingView (as of 28.08.2025).

U.S. dollar versus alternative cryptocurrencies: Significance of inflation today